US Tariffs on Chinese Solar Panels Expected to Have Minimal Impact on Cost of Solar Systems in US

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While US tariffs on solar products coming from China may cut imports nearly in half, a new study from IHS shows that the impact on total solar system costs is likely to be negligible.

Before the US Dept of Commerce preliminary ruling was made, “IHS estimated that 2 gigawatts (GW) worth of solar modules shipped into North America in 2012 would be imported from Chinese manufacturers. This would have represented as much as 60 percent of the market for North American use.”

However, with the tariff, shipments are expected to be reduced by about 45% of 1.5 GW in 2012.

“The Commerce Department action will have a major impact on the North American solar market, constraining supplies and driving up prices for modules and systems,” said Mike Sheppard, a photovoltaics analyst at IHS. “Even when alternative supply lines are adopted, the penalties are likely to add as much as 12 percent to the cost of solar modules, lowering the average return on investment (ROI) for solar systems in the region by as much as 2.5 percent.”

However, if these Chinese solar companies produce modules, laminates, and panels in a different country, using Chinese solar cells, they are exempted from this ruling. So, many are assuming these companies will simply move those processes to a nearby country with low labor rates (i.e. Taiwan). This will still lead to an increased module cost of 10-12%, but module costs aren’t everything.

Accounting for a 10 percent increase in total module cost based on the cell outsourcing strategy mentioned above, the cost of installation for a ground solar system rises to $2.65 per watt, up from $2.56 per watt.

That’s something, but it’s probably not as bad as you were expecting, right?

With such numbers, “the ROI for solar installations is expected to only decline by 1.5 percent to 2.5 percent.”

solar cost increase from us china solar tariff

“This reduced ROI means some investors may think twice when valuing other vehicles to put their money,” Sheppard said. “However, most investors will not be deterred.”

Source: IHS


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Zachary Shahan

Zach is tryin' to help society help itself one word at a time. He spends most of his time here on CleanTechnica as its director, chief editor, and CEO. Zach is recognized globally as an electric vehicle, solar energy, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, Canada, and Curaçao. Zach has long-term investments in Tesla [TSLA], NIO [NIO], Xpeng [XPEV], Ford [F], ChargePoint [CHPT], Amazon [AMZN], Piedmont Lithium [PLL], Lithium Americas [LAC], Albemarle Corporation [ALB], Nouveau Monde Graphite [NMGRF], Talon Metals [TLOFF], Arclight Clean Transition Corp [ACTC], and Starbucks [SBUX]. But he does not offer (explicitly or implicitly) investment advice of any sort.

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